Evening Soybeans: Drier Than Normal this Week; Hot/Dry Next Week
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March soybeans close slightly lower on the session Thursday with an inside trading day with meal closing slightly higher with an inside trading session and soybean oil closing lower on the day. The weather forecast is still threatening for Southern Brazil and Argentina with just scattered rains in the forecast this week and even less next week with heat for Argentina next week. The US dollar index traded sharply lower on the day which would normally provide good support. In addition, energy prices were sharply higher on the day. With strong export demand, the market seemed to have all the news it needed to rally sharply. The weekly export sales report showed that for the week ending January 27 showed net soybean sales at 1,095,522 tonnes for the current marketing year and 881,816 for the next marketing year for a total of 1,977,338. Sales were expected near 600,000-1.2 million tonnes for old crop and 200,000-550,000 tonnes for new crop. Cumulative soybean sales have reached 81.1% of the USDA forecast for the 2021/2022 marketing year versus a 5 year average of 79.9%.
Net meal sales came in at 605,485 tonnes for the current marketing year and -1,313 for the next marketing year for a total of 604,172. This was well above trade expectations and the highest since January 16th of 2020. Net oil sales came in at 4,149 tonnes for the current marketing year and -29 for the next marketing year for a total of 4,120. Cumulative oil sales have reached 74.6% of the USDA forecast for the 2021/2022 marketing year versus a 5 year average of 51.5%. For the February USDA supply/demand report, traders see soybean ending stocks near 310 million bushels, 182–350 range, as compared with 350 million bushels in the January update. World ending stocks are expected near 91.51 million tonnes, 86–94 range, as compared with 95.2 million tons in the January update. Brazil soybean production is expected near 133.65 million tonnes, 126.5–137.5 range, as compared with 139 million tonnes in January. Argentina production is expected near 44.51 million tonnes, 43–46 range, as compared with the January update at 46.5 million tonnes.
MARKET IDEAS
The market seemed to have all the bullish news it needed to rally sharply on Thursday, but closed lower. While the market is extremely overbought, the continued steep uptrend in open interest suggests that fund traders are still aggressive buyers. Until the weather forecast shifts to more normal weather for Argentina and southern Brazil, buyers are likely to remain active on breaks. Support for March soybeans is at 1494 ½, with 1564 and 1598 as next resistance. March meal is still operating under the negative technical influence of the February 2nd key reversal. Resistance is at 441.30, with 424.60 and 417.50 as support. March soybean oil support is at 64.39, with 67.79 as next resistance.